STUDIO CITY (KCAL9) — It’s importance for kids to establish financial literacy at an early age!
Youth Financial Literacy Expert, John Lanza, stopped by KCAL9 Tuesday to discuss how viewers can ensure a smart financial future for children.
Lanza created The Money Mammals Saving Money is Fun Kids Club program which teaches the importance of financial literacy.
The program includes an award-winning DVD and the Share, Save & Spend Smart Book series.
The importance of teaching financial literacy at an early age
- Kids get the spend message as early as two.
- Therefore, it’s really important that they are exposed to equally powerful messages about sharing (charitable giving), saving and spending SMART.
Share, Save and Spend Smart jars
- How to set up this system in your home.
- The three jar system is designed to help teach kids to make smart money choices anytime they receive an allowance. It’s really important that parents move past the piggy bank paradigm. Rather than dropping money into something opaque to save for the far too abstract “rainy day,” we should allow them to see the money accumulate as they make smart money choices. We want to help break the taboos that have long hung over families discussing the topic of money for too long. We want to help families become “money comfortable.”
The power of giving
- Teaching children the concept of charity and giving back.
- When you setup a three jar system, the Share jar very often gets paid short shrift. This actually inspired me to write my second book, Joe the Monkey Learns to Share. I wanted to help kids understand that they are not alone in thinking that they might just want to spend the money in that jar…UNLESS they can find a cause that is truly meaningful to them.
Money mistakes are OK
- Learning from small mistakes to avoid larger ones later on
- It’s really important, and sometimes extraordinarily difficult, to give your kids autonomy over their money to some extent. I believe it’s really important that parents do allow kids to spend their money and make small mistakes now so that they’ll have a context for understanding how to make smarter spending decisions as they get older
Steps for setting up an allowance
- Once the three jar system is in place, parents should be sure to provide a meaningful amount of money for their kids.
- Unless their financial situation is such that they can’t afford to do so, parents can use the maxim of one dollar per week per age of the child.
- For example, a 7-year-old would get $7 per week that they would then put into their three jars. If the child gets too little purchase things they want in a reasonable amount of time, it will be difficult for the lessons to stick.
Financial literacy as a family affair
- Because money issues are one of the big drivers of divorce, we want to help families more openly discuss money.
For more information, visit The Money Mammals.